There Is No “Male-Female” Wage Gap

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We hear it time and time again. We hear it from news sources, politicians, activists, and professors. We even hear it from our own President.

“Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong. And in 2014, it’s an embarrassment. Women deserve equal pay for equal work.”

We hear this proclamation that supposedly points to widespread wage discrimination against women, and then the argument that government needs to take more power to help those in need. But the real truth of the matter? Well this paints an entirely different picture.

Explanatory Economics

This statistic is created by looking at the median income earned by women working full-time and comparing it to the median income earned by men working full-time. This largely ignores any differences in jobs, training, and life choices, meaning that it does not measure “pay for equal work.” Likewise, it doesn’t even consider the fact that men who work “full time” work more hours than women working full time.

Most economists find that this difference in pay is largely due to the choices of men and women in their daily lives.

This begins in college, through choice of major. With more women than ever enrolling in college, it would seem that they should be the one out earning their male counterparts. So why don’t they? Studies show that women repeatedly self-select into majors with much lower earnings potential. In some recent studies, it’s been shown that 7 out of 10 of the highest paying majors are dominated by men, resulting in 75% of these degrees being awarded to men each year. On the flip side, the highest paying major with that many degrees being awarded to women is public health, with a median salary around $60K (versus over $120K for petroleum engineering majors).

This disparity carries through to the workforce as well, where much of the wage gap can be explained through differences in occupation. Women tend to be highly clustered in fewer professions, as over 44% of all working women hold jobs in just 20 professions, such as nurses, teachers, and secretaries. Meanwhile, the top 20 male dominated jobs make up just about 35% of working men. And while occupational selection is apparent, there is also the question of hours worked. While most studies compare the pay of men and women that work full time, this does not account for the number of hours worked past 35 each week. According to the data, men on average work longer hours than women (between jobs or within them). This would certainly lead to a small difference in pay over time in the aggregate.

Another factor to consider in the realm of the wage gap is the disparity between men and women in danger arising from their jobs. According to The Bureau of Labor Statistics, the fatality rate from workplace injuries is nine times higher for men than it is for women. When it comes to “hazard pay,” it is certainly understandable that this could explain a difference in pay. Overall, in a study done by Dr. Andrew Chamberlain of Glassdoor, when controlling for workers with similar age, education and years of experience the gap fell to 19.2 percent. Then when looking at workers with the same job title, employer and location, it fell to 5.4 percent, or just over 94 cents on the dollar.

The Truth, the Whole Truth, and Nothing but the Truth

This still isn’t the entire story. Even after controlling for education, occupation, and experience factors, the gap still persists, albeit to a lesser extent. Claudia Goldin, the first female tenured professor of Economics at Harvard University, has been studying gender and labor economics for years, and has found a way to account for nearly all of the remaining difference. She does this through the lens of something she calls “Temporal Flexibility.”

She finds that women’s decisions in the aggregate adversely affect their pay. This can range from seeking flexibility in their work and hours, a lower value placed on competitiveness and income growth in the workplace, or even just a preference for certain locations closer to home. This can even affect job selection, as women can tend to seek out jobs with more flexible hours or the ability to work from home, which are great when caring for family members. Indeed, she sees the change in income growth between men and women occur most drastically about 1-2 years after a child is born.

This “Temporal Flexibility” also explains the differences in the wage gap between industries. She cites that it tends to be largest in the legal, finance, and certain health sectors (podiatry, dermatology) where demands on time tend to be rigid and high, and where self-ownership of practices is relatively high. Meanwhile, the technology sector and certain health sectors (pharmacy) tend to be more equal due to their adaptability in terms of hours worked and family time.

My Own Words

At this point, we can see that that “77 cent wage gap” is a false narrative, but it is not my case that discrimination in the U.S. does not exist. It certainly probably does exist in some places, but the case of “systemic discrimination” in the U.S. has no evidence or smoking gun. Politicians like to use it to promise change in exchange for votes, and media personalities don’t do much better. In fact, in a press conference about using government to fix the wage gap, it was revealed that the White House itself has a gender wage gap in it’s own staff of roughly 88 cents!

Unfortunately, by lying about a false problem, we create real ones. Mainly, the fact that those women who face actual discrimination or economic hardship would be best served by careful research and actual facts, not hyperbole that argues about a false issue. Second, despite the lack of discrimination, it does not mean that social change cannot alleviate the costs of Temporal Flexibility. We can continue to encourage men to take more of these family responsibilities, as they have been doing in increasing numbers recently. We can also encourage employers to be more creative in their hiring of flexible positions. What we don’t need is more government legislation and regulation to enforce inconsistent and arbitrary rules on the entire economy that will do little to help women, and in fact may end up blowing up in the face of families.

Those who continue to push the wage-gap narrative have got to know better by now. It’s a shame so many of them are looking for evidence to justify their victim complexes.